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Opening Remarks at the Compliance Outreach Program for Investment Companies and Investment Advisers

Chair Mary Jo White

April 19, 2016

Good morning and thank you, Marc, for that kind introduction.  It is my pleasure to be here today to welcome this distinguished group of professionals to the SEC’s 2016 Compliance Outreach Program for Investment Advisers and Investment Company Senior Officers.

I am happy to see such a large turnout.  We had more than 800 people register for today’s conference within the first week after the registration period opened, and today we see the result – a large and very diverse cross-section of attendees – both here in-person in Washington, DC and through our webcast.  Many of you are Compliance Officers, and we also have Chief Executive Officers, Chief Financial Officers, Chief Operating Officers and others here today.  We very much welcome your attendance as a reflection of how important the work of your Compliance Officer and compliance personnel are to your entire organization.

No matter what your role, I think you will find that we have put together a great program with knowledgeable speakers and informative panels.  Throughout the day, experts, both from the SEC staff and industry, will share their insights on a number of important issues that affect investment advisers and investment companies such as cybersecurity, liquidity management, and rulemaking initiatives in the Division of Investment Management (“IM”).  Speakers include members from three SEC divisions and offices (OCIE, IM, and the Division of Enforcement) and staff from seven of our 11 regional offices.  The agency-wide representation at this conference highlights the importance we place on robust communication and sharing of information within the SEC and with you that we believe is necessary to carry out the SEC’s mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

I have said this many times before, but it cannot be emphasized enough.  You are critical to our mission of protecting investors and the integrity of the markets.  Every day, millions of people invest their hard-earned dollars through your firms, hoping to educate their children, fund their retirements, and realize countless other dreams.  These investors place their trust in you and your firms, not only for sound investment advice to help their assets grow, but also to safeguard those assets from misconduct and undisclosed risks.  Their trust demands that your firms must not only have an unwavering commitment to investors’ best interests, but also strong, comprehensive and effective compliance programs and cultures.

Investors are not the only ones who rely on you.  We at the SEC also rely on you because, as much as we strive to be everywhere, we do not have the resources to actually be everywhere.  OCIE’s National Exam Program now has approximately 530 dedicated professionals who are tasked with examining nearly 12,000 registered advisers, who advise approximately 11,000 mutual funds and ETFs, and nearly 30,000 private funds.  And the total amount of assets under management has grown to a staggering $66.8 trillion dollars.

As large as these numbers are now, they are increasing every day.  In an effort not only to keep pace with this growth, but also to expand our exam coverage of investment advisers, OCIE is in the process of devoting more of its staff and resources to its investment adviser/investment company examination program by transitioning some staff from broker-dealer exams to investment adviser exams, as well as using our appropriations to augment exam staffing, with the goal of bolstering staffing levels in the IA/IC program by 20 percent.

With this larger team, OCIE hopes to do more national priority exams, such as the retirement-focused assessments announced last summer (known as OCIE’s “ReTIRE” initiative”) and reach more investment advisers and investment companies that have never been examined before.

Despite OCIE’s efforts to optimize our resources, there is a need for significantly more OCIE resources if we are to fulfill our exam responsibilities to investors, which I continue to seek from Congress in our annual budget requests.

It goes without saying that you will always play a critical role as the first line of defense for investors in our markets.  That is true whether your compliance functions are in-house or you rely on contractors, consultants, or other third-party vendors for assistance.  You can draw on external assistance, but you cannot outsource your obligations.  Regardless of the structure, each registrant is ultimately responsible for adopting and implementing an effective compliance program and is accountable for its own deficiencies.

Strong compliance must permeate your organization at every level.  The right tone at the top and a strong CCO are crucial, but not sufficient.  When firms do not implement and enforce a comprehensive set of policies, procedures, and systems to govern and supervise all of their employees, it is much more likely that investors will be harmed.  And when firms do not fully and fairly disclose conflicts of interest, investors are deprived of the opportunity to make fully-informed investment decisions.  Together we must make sure that does not happen.

One of the cornerstones of our National Examination Program is supporting your efforts to build and implement strong compliance programs and compliance cultures at your firms.  We want to see firms foster an environment in which every individual, at every level understands the importance of the compliance program and believes in the compliance culture.  And you are the ones most instrumental to achieving that.

Today’s outreach conference is part of our effort to support you.  This event and the others like it that we host throughout the year not only help promote a better understanding of OCIE’s examination priorities and of common deficiencies we are finding, but also foster the type of constructive dialogue that we think is essential to building the effective compliance programs that we all want to see.


It is great to see so many of you here today to participate in this conference, and continue to work to ensure that our capital markets remain the strongest and most reliable in the world.

I hope that you will take the opportunity at this event today – and at all of our conferences – to ask questions, offer suggestions, and give us feedback on our efforts.

Thank you very much for being here and for all you do.  Have a great conference.

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